It's still the largest tech company in the world - let's make no mistake about that. But Apple reported yesterday that its profits were flat - despite brisk sales of iPhones and iPads. In after-hours trading, Apple's stock plunged, reflecting fears that interest in Apple products may start waning as consumers seek more affordable options.

Here's NPR's Laura Sydell.

LAURA SYDELL, BYLINE: It's not that consumers didn't buy a lot of iPhones - 11 million more than last year. It also sold tons of iPads. But analysts were expecting more after such exceptional growth in recent years. Apple now faces competition from lower-cost products that comes in different shapes and sizes.

Speaking during a conference call, Apple CEO Tim Cook defended the size of the iPhone 5, which is smaller than some popular models from the competition.

TIM COOK CEO, APPLE: It also provides a larger screen size for iPhone customers without sacrificing the one-handed ease of use that our customers love. So we put a lot of thinking into screen size and believe we picked the right one.

SYDELL: Apple also saw a drop in Mac sales. Still, some analysts were not writing Apple off.

MIKE MCGUIRE: I don't know that I'm ready to call the end of the empire at this point.

SYDELL: Mike McGuire, an analyst at Gartner, says Apple also released a lot of product upgrades before the holiday.

MCGUIRE: They're growing, having to invest in that growth.

SYDELL: During yesterday's conference call, Apple's CEO, Cook, also made it clear that the company has new products in the pipeline, adding fire to rumors of an Apple TV set, or a cheaper iPhone. And that could be just what Wall Street needs to see.